“Can insurance help me pay off my Dh 2.7 million loan?” “
I have had a loan since the late 1990s, as well as credit cards in addition to another loan I took out a few years ago. However, I was unable to pay regular installments as I lost my job in 2015.
The two loans have been restructured several times. One loan is 2 million Dh and the other 700,000 Dh, and I was paying monthly installments of 50,000 Dh. At the time, I was running a business and could afford the payments.
Since I lost my job, I was working as a consultant on an ad hoc basis and paying smaller amounts for loans.
However, I realized that I could not continue with this approach due to the accrued interest and penalties that were piling up.
A few months ago, a court froze my bank account and banned me from traveling. I currently have a lawyer discussing my situation with the bank’s legal team, but I still have no job and no way to pay the loan or support my family.
I am desperate to find a job and to be able to negotiate and resolve this issue.
My question is, if the loans are insured, can they be settled through the insurance companies? Or is there something else you advise me to do to resolve my issue? SM, Dubai
Debt Panelist 1: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD
I am sorry to hear about your situation and it is commendable that you are trying to find a workable solution so that you are able to meet your commitments.
As a first step, please continue to speak with the bank, either directly or through your lawyer, to reiterate your current situation and seek assistance in reaching a viable settlement plan.
Request for review of accumulated penalties and other charges, taking into account the age of the loan. Evaluate, if you haven’t already, whether there are assets that you can liquidate in the UAE or at home that you can use to settle some of the outstanding amount.
While loan insurance normally covers any unfortunate event, please ask the bank for a copy of the relevant terms and conditions to see if there are other coverages available.
I wish you the best of luck in coming to a good settlement plan with the bank and also in quickly finding a new job that can help you make the required regular payments while taking care of your daily needs.
Panelist on Debt 2: Jaya Ratnani, Managing Partner at Freed Financial Services
Many people need loans and debt to make business investments or take on other responsibilities. While these are justifiable, it’s important that you don’t let them turn into bad debt.
Restructuring a loan is a short-term solution and is usually done over one or two years. There are guidelines from the Central Bank on the maximum number of restructurings that can be carried out. In addition, one must have a source of fixed income, namely a salary or business income. As you do not have a fixed job, this option is not possible.
There are debt settlement options that can be discussed with the bank. Since your loan is over 20 years old, you would have already paid a substantial amount of interest to the bank. Sometimes banks are willing to negotiate debt settlement when they get an amount that is less than what is owed.
You can also seek help from professional negotiators who can help you choose the program that is right for your needs.
If you make one-off payments without an agreed solution from the bank, it will be considered a default and the bank is within its rights to take legal action. You can explore the possibility of taking your plea to court and filing an insolvency claim.
Under this law, borrowers have repayment methods that offer protection against criminal prosecution. A forensic expert is appointed who will coordinate and draw up a plan to settle financial debts and fulfill all obligations under the stipulated plan.
When it comes to personal loan insurance, you’ll need to check whether the monthly premium you pay covers job loss or whether it’s comprehensive coverage that only covers death or disability. This will be mentioned in your original loan agreement, a copy of which you should have kept when you take out the loan.
To improve your current financial situation and seek stability, you need to look for a suitable job instead of taking it on a piecemeal basis. If necessary, seek help from your peer groups to find the right job opportunity. Hope you will be able to get through this difficult situation.
Debt Panelist 3: Nathan McFarlane, Founder of AskHelpWith.com
It seems to be an extremely difficult situation. The loans are substantial amounts and they pose additional difficulties.
To have loans of this level, my assumption would be that you would have other assets? If so, I would start to consider selling other assets you own, including properties, and downgrading your lifestyle in the meantime to address these issues.
In the event that you don’t own any properties or other assets, this makes your situation much more difficult.
Loan insurance policies often cover interim job loss payments, but I find it unlikely that they will cover such a long period of unemployment.
Getting legal advice at this point is definitely a smart move if you have access to it.
I think it’s always important to remember that banks want to collect funds and are ready to negotiate, especially when it comes to larger sums of money.
As I always advise, keep constant contact with the bank to minimize further problems. Good luck.
Update: December 22, 2021, 5:06 am